Increased Demand for Recruiters: Bad News?

A recent Recruiter.com news report, titled “Employment for Recruiters Increased in 2011 with a Jump in December”, caught my eye because it made me wonder whether it could possibly be bad news.

How could it possibly be bad?

Of course, common sense suggests that when there’s an increased demand for recruiters it is because there is an increased demand for other kinds of personnel. More jobs to fill, more job applicants and recruiters needed to fill them. Right?

Not necessarily—at least not from a purely logical, analogical point of view or the viewpoint of a recruiting-industry outsider unfamiliar with how job markets and recruiting work. From these perspectives, it may seem that an increased demand for recruiters could be bad news.

For example and by comparison, consider an increased demand for oil wells, oil rigs, and drill sites. Does this increase in demand automatically mean that there’s a “good news” increase in the amount of available oil, or, instead and possibly, that dwindling reserves and harder-to-find oil require more widespread and deeper drilling to find the little that’s left?

The Search for Jobs, Oil and Water

Conceivably, there could be a spike in hiring of oil workers, demand for oil drill bits, tubing, etc., precisely because oil is becoming harder to find. The same is even more obviously true of water: As a deadly drought takes its toll and cattle and crops die off, the demand for hickory dowsing sticks (like the one shown here), shovels, other excavation equipment and rain barrels may soar. The worse it gets, meaning the less water that is found, the more difficult its extraction or the poorer its quality, the more frantic the efforts to find it and the greater the demand for some of the resources required to find whatever remains accessible.

So, at least theoretically, the recent increase in demand for recruiters could be a reflection of a scramble to find the few (good) jobs that are available—scarce jobs being analogous to scarce oil or water. It could be argued that having become harder to find, new jobs require more recruiter agency manpower, energy and other resources to locate and extract. Given that job applicants are more than plentiful, they are not the analogue of the scarce resource in this scenario; instead, it’s the jobs that are the liquid gold and search goal. The abundant job seekers are like the plentiful eager consumers of oil and water, waiting and praying for relief.

Of course, for the analogy with post-peak oil rigs and drought-targeting forked hickory dowsing sticks to be valid, the demand for recruiters must, for the most part, be a reflection of a shortage of (good) jobs, rather than an abundance and demand so great that currently employed recruiters simply can’t keep up with the need for more workers. (Although there is one talent shortage scenario that requires more recruiters, discussed below, which may currently be playing out.)

The analogy also applies only to independent and agency recruiters (as sales staff or account managers), since in-house corporate recruiters will be offering, rather than looking for jobs to fill. It also presupposes that a substantial number of the scarce job listings have to be sought out, rather than dropped on a recruiter’s lap. The latter is far more likely in a job market in which there is a shortage of job candidates—a situation that, in numerous sectors of the economy, currently does not exist.

Hence, if jobs are hard to find, it just might take more recruiters to find them, just as the harder it is to find a lost child, the greater the number of volunteers required to beat the bushes and search.

The Oil-Water-Job-Search Analogy Deepens

If the comparison of an increased demand for recruiters and increased demand for oil rigs and dowsing sticks is cogent, three other features of the search for scarce oil and water will strengthen it, if they are also found in the search for jobs:

the lack of alternatives to the resource (oil, water, jobs)

the inelasticity of demand for it (which means that demand will not fluctuate much with changes in price, wages or supply)

the decreasing marginal utility of whatever (re)sources, i.e., jobs, barrels of oil, gallons of water, that do remain.

Lack of alternatives and inelasticity: Given that for farmers and many industries there is no alternative to water and that it is absolutely indispensible, the demand for water will be quite “inelastic” (ironically, just like salt, which increases the demand for water)—which means that changes in the price of water will not impact essential demand much at all, e.g., a Sahara Desert dehydrated straggler will pay anything for a bottle of water.

What about jobs as a compared resource?—Are they like water, with respect to the lack of alternatives and to inelasticity of demand? To the extent that there are few or no alternatives to jobs to be filled (e.g., automation and robotics-dominated tasks that require no recruitment), the recruiter scramble to find jobs to fill will be all the more closely analogous to the scramble for water (and to a lesser extent similar to the search for oil, since there are energy alternatives being developed). So, like oil and water, jobs may be a commodity for which there is basically no current alternative.

As for elasticity of demand for jobs, while the demand for any specific job (either in terms of employer demand for job fillers or job-seeker demand for the jobs) is relatively elastic (since changes in salary and/or benefits will trip increases or decreases in applications for it), demand for jobs construed more generically seems highly inelastic, since everybody has to eat, while crime and lottery tickets, in general, do not pay.

Diminishing marginal utility: The oil that oil companies scramble to find in the post-peak oil era is increasingly marginal. Poorer quality, harder and costlier to extract (e.g., tar sands oil), and smaller deposits translates into “diminishing marginal utility” and “increasing marginal costs”. Is the same true for jobs? Is it possible that the increase in the number of employed recruiters is a symptom of a similar search for an increasingly marginal, poorer resource—in this case, marginal jobs?

On this interpretation, additional recruiters (representing an increased marginal cost of business) may be required when the jobs to be filled are hard to sell—for example, jobs with low salaries, poor advancement prospects, unstable companies, dirty or dangerous work conditions and substandard benefits packages. A company without its own in-house HR recruiter and little experience in pitching its own jobs may feel it needs expert recruiter help in flogging such dog jobs.

Alternatively, in a recession-whacked economy, the company may no longer be able to afford a full time in-house recruiter and so may choose to farm out the task of filling essential jobs that open up for any reason other than expansion or restoration of pre-recession employment levels. The fact that a recruiter is hired for this purpose need not be construed as a sign that the job market is improving.

So, Good News, or Bad?

Accordingly and theoretically speaking, the recent increase in recruiter employment could be the result of four unfavorable developments and be a kind of bad news, rather than good:

The supply of good jobs available has shrunk to the point that more resources have to be thrown into the search, evaluation and promotion of them, said resources including additional recruiters.

The jobs available include very many marginal, unattractive jobs that have to be promoted very aggressively and by experts, namely, professional recruiters, to whom the task is being out-sourced.

There is a shortage of high-end talent to fill whatever high-end jobs are available, requiring expanded and intensified efforts to find qualified job candidates. In this scenario, the outstanding jobs and outstanding candidates could be historically speaking scarce, but with the candidates being scarcer than the jobs.

Some companies may no longer be able to afford an in-house full-time recruiter.

Clearly, if the bulk of the additional recruiters are hired as in-house HR staff, the news is almost certainly good, since their job is only or primarily to fill jobs, not to find them. Moreover, some recruiters may be returning to positions that were previously cut. Otherwise, the recruiter employment data are more ambiguous, and may or may not correlate with economic recovery or expansion, because an agency may either hire an additional recruiter to find new clients and jobs or, alternatively and more positively, to cope with improved demand for workers.

In the worst case scenario, the additional recruiters hired would translate into scarce or poorer available other jobs to be filled by them through their aggressive job searches on behalf of candidates and/or job promotion on behalf of companies. That would force some recruiters into operating a lot like huckster snake-oil salesmen when good snake oil is getting harder and harder to find.

An Analogy That is Too Slick and Doesn’t Hold Water

However, these analogies with vanishing (snake) oil and water are misleading. Jobs are not like non-renewable, rapidly disappearing resources that require ever more intense efforts to locate, extract and market. No, recruiters are not like dowsers and oil-rig workers desperately searching for a treasured resource that is, of necessity, increasingly scarce.

A key disanalogy between recruiters and the dowsers and oil workers is that, through collaboration, recruiters, job seekers, companies, universities, governments, inventors, researchers and consumers can create more of their key resource—jobs, which is something that no dowser or oil men can do, no matter how much help and collaboration they get. That’s because jobs, unlike oil and water, are a renewable resource.

What’s more they are a resource whose total supply can be expanded virtually indefinitely through human ingenuity and drive, unlike the world’s reserves of oil and water, which are finite and vanishing.

Given this crucial difference between the inherent potential for job growth and the bleak future for a non-renewable, non-recyclable, non-expandable resource, any knee-jerk “bad news” oil/water-based interpretation of the recent increase in demand for recruiters seems full of holes, like a sieve that can’t hold water…

Michael Moffa, writer for Recruiter.com, is a former editor and writer with China Daily News, Hong Kong edition and Editor-in-chief, Business Insight Japan Magazine, Tokyo; he has also been a columnist with one of Japan’s national newspapers, The Daily Yomiuri, and a university lecturer (critical thinking and philosophy).